Tesla shares closed at $454.53 on Thursday, marking a 1.74% gain, following a controversial announcement from CEO Elon Musk. He confirmed that the newest iteration of the company’s Full Self-Driving software, version 14.2.1, now permits drivers to send text messages while the system is engaged, contingent on the “traffic context.” This move has ignited significant debate, as texting while driving remains illegal across nearly all U.S. states, regardless of any active driver-assistance features.
Regulatory Scrutiny and Legal Liability
The update arrives as Tesla remains under investigation by the U.S. National Highway Traffic Safety Administration (NHTSA). That probe, initiated in October 2025, encompasses approximately 2.88 million vehicles and is examining 58 reported incidents, which include 14 crashes and 23 injuries. Investigators are focusing on instances where vehicles equipped with FSD ran through red lights or veered into oncoming traffic.
Critically, Tesla’s FSD continues to be classified as a Level 2 system, meaning the human driver retains full legal responsibility. The company has merely adjusted the driver-monitoring parameters for certain scenarios without upgrading the system to a higher autonomy level, which would shift liability to the manufacturer.
Contrasting Performance in Key Markets
Positive delivery data emerged from China, providing a counterpoint to the regulatory concerns. Tesla’s Shanghai facility reported 86,700 vehicle deliveries in November, representing a near 10% year-over-year increase and a substantial 41% jump from October. Demand appears robust, with wait times for the Model Y now extending into January/February 2026, effectively indicating a sold-out status for 2025 in that market.
However, the broader annual picture for Tesla in China shows challenges. Cumulative deliveries through November totaled 754,561 units, an 8.3% decline compared to the same period the prior year. The company continues to face intense competitive pressure from domestic rivals like BYD and Xiaomi.
Expansion of Autonomous Initiatives
In other developments, Musk stated in late November that Tesla intends to roughly double its robotaxi fleet in Austin during December. This service, launched in June 2025, currently operates with an estimated 30 vehicles, all of which still carry safety drivers. In a sign of potential geographic expansion, Tesla has also secured a permit to operate a transportation network in Arizona, beyond its existing areas of Austin and the San Francisco Bay Area.
Analyst Sentiment: Cautious with High Divergence
Wall Street analysts present a mixed but generally cautious outlook. On November 25, Mizuho reaffirmed its “Outperform” rating on Tesla stock but reduced its price target from $485 to $475, citing reductions in electric vehicle subsidies in both the U.S. and China. Conversely, Stifel Nicolaus maintained its “Buy” recommendation with a $508 target, pointing to advancements in the robotaxi program.
The overall analyst consensus currently stands at “Hold,” with an average price target of $393. Yet the extreme range of individual targets—from $120 to $600—highlights the deeply divided opinions on Tesla’s long-term trajectory.
Financial Forecasts and Stock Performance
Attention is now turning to the next quarterly results, scheduled for release on January 27/28, 2026. Market experts project fourth-quarter 2025 earnings per share of $0.45, with full-year 2025 EPS estimated at $1.65. This would represent a notable decrease from 2024’s results.
Despite recovering approximately 19% from its November lows around $383, Tesla’s share price continues to trade below its all-time high recorded in December 2024.
